Fiscal Realities Will Affect State Workforce Long-Term

By Leslie Scott

It’s no secret that state government employees—the number of them, their compensation and their benefits—have been the subject of much inquiry and debate as state governments wrestle with significant budget shortfalls.

Governors across the country have asked state employees to sacrifice as tough decisions such as hiring freezes, furloughs, pay cuts and layoffs, as well as contribution changes to health care benefits and employee pensions, are being made to balance state budgets.

The recent report by the National Association of State Chief Information Officers, “IT Workforce Under Pressure,” indicates state CIOs have indicated hiring freezes and elimination of vacant positions continue to be the biggest challenges when developing, supporting and maintaining IT services for state government.

While the current fiscal realities have dictated these actions, the long-term ramifications these actions will have on the state government workforce raises concerns.

Members of the National Association of State Personnel Executives indicated the number one issue they face in 2011 is low morale among state government employees. Stagnant or decreased pay, along with concern about job security, has had a major impact on employee morale. In addition, negative portrayals in the media and public perception of state employees also have contributed to the low morale. In many cases, reductions in force have required state employees to take on additional work responsibilities with little or no training in how to do the new work they’ve inherited.
State human resource directors fear a tidal wave of factors that could leave the state government workforce with limited experience, talent and needed skill sets. Approximately 30 percent of state government employees are eligible to retire within the next five years, according to 2010 research by Dr. Sally Selden of Lynchburg College. An economic recovery is anticipated to spur retirements, according to a 2010 joint survey by NASPE, the International Public Management Association for Human Resources and the Center for State and Local Government Excellence. These retirements will mean a significant loss of institutional knowledge and experience.

At the same time, with training and development budgets slashed, and employees with less seniority often affected first by layoffs, little is being done to prepare employees to take on the leadership and experienced roles that will be vacated by retirees. Also of concern is that the private sector, which typically experiences an economic recovery about 18 to 24 months before the public sector and hence begins increasing hiring first, will lure away high-performing, high-potential state government employees.

While state HR directors have indicated little is known now about how the changes to the benefits packages will affect future recruitment, the National Association of State Chief Information Officers’ report indicates reduced benefits are a major concern in their recruitment efforts. Benefits and stability have been the recruitment tools they’ve utilized most often because they can’t compete with private-sector salaries.

While budgets will remain tight, it will be more critical than ever for states to recruit, retain and develop talent as they are stretched to deliver services with a significantly leaner workforce.

Leslie Scott is the executive director of the National Association of State Personnel Executives, an affiliate of The Council of State Governments.